Cyprus, Asarco, Phelps Expected to Discuss Offer

Cyprus Amax Minerals Co. and Asarco Inc. are expected to meet with rival Phelps Dodge Corp. to negotiate the takeover of the two copper producers, which on Wednesday rejected Phelps’ hostile offer of $2.82 billion.

The three companies will probably start talks before Cyprus and Asarco shareholders vote next Thursday on those two companies’ proposed $2.45-billion all-stock merger, or Phelps’ cash and stock offer, analysts said.

Neither Cyprus nor Asarco have said publicly that they have talked with Phelps.

Cyprus and Asarco face mounting pressure to negotiate with Phelps to form the world’s largest copper producer under the threat of shareholder lawsuits for not entertaining the bids, analysts said.

Cyprus and Asarco also might get a slightly higher premium from Phelps, which already boosted its offers twice, if they negotiate an agreement.

“They don’t have to come to the table, but if they don’t, all the rest of the things like lawsuits are coming,” said Prudential Securities analyst Clarence Morrison, who has a “hold” rating on the three companies. “The timing of Phelps Dodge coming in like this forces them into a decision-making mode.”

New York-based Asarco and Cyprus, based in Englewood, Colo., could announce they’ve started talks with Phelps as early as today, said Victor Lazarovici, an analyst at Nesbitt Burns Securities.

Officials of all three companies weren’t immediately available to comment.

In New York Stock Exchange trading, Phoenix-based Phelps shares fell $2.19 to close at $56.50; Cyprus fell 38 cents to close at $18.44; Asarco fell 31 cents to close at $22.19.